The U.S. Interstate Highway System turns 70 in 2026. As one of the greatest public works projects in American history enters its septuagenarian era showing its age, the people who build it face their own issues. The new year brings a mix of opportunities and challenges in the areas of labor, logistics, sustainability and the integration of AI technology.
The infrastructure sector "is entering the latter half of the 2020s with solid growth prospects," according to portfolio management firm Loan Analytics.
Fueled by government investment to address critical infrastructure needs, the industry will see sustained demand from funding programs such as the IIJA.
But that demand will be "tempered by challenges such as rising costs and labor shortages," the firm believes.
Loan Analytics projects moderate but steady growth in this sector, as the industry works to bridge the nation's large infrastructure gap. "Contractors that adapt by embracing new technologies, workforce development and efficient practices are poised to benefit from the ample work."
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The firm believes policy support remains crucial. "Continued infrastructure funding and supportive regulations will underpin the industry's success," it said.
In a five-year construction industry outlook report, Loan Analytics noted that robust public funding has been the sector's "primary engine of growth."
A surge in federal, state and local government budgets for transportation infrastructure has helped.
Most notable was a $350 billion bump in federal funding for highways over 2022–2026 due to the bipartisan IIJA, signed by President Joe Biden in 2021.
"This infusion, largely distributed to states, ensures a pipeline of projects for contractors," said Loan Analytics.
But state and local governments also have maintained healthy highway spending, leveraging federal grants and their own gas-tax revenues, it said.
As a result, construction firms have enjoyed a strong backlog of road work through the mid-2020s.
Overcoming Continuing Challenges
Prices for key inputs like steel, asphalt, cement and fuel have risen, as have costs for lumber and machinery.
Last year, the USDOT cautioned the industry that up to 40 percent of the remaining IIJA federal highway funds could be lost to inflation, reported Loan Analytics.
"Contractors are operating with tight profit margins, as they often locked in bid prices before the inflation surge and must absorb higher expenses. In response, firms are seeking escalation clauses in contracts and more efficient construction methods to control costs."
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Another seemingly perpetual challenge for the construction sector is the skilled labor shortage. In states experiencing a surge of highway and data-center projects, contractors are competing for the same pool of skilled workers, the firm found.
The labor crunch is driving construction wages, up 4.4 percent as of early 2025, as well as greater investment in workforce development.
"Contractors are also adopting new technologies, like automation, robotics and project management software, to improve productivity with fewer workers."
On the flip side, technological and environmental trends are creating new opportunities, noted the firm.
"There is growing use of advanced project management tools, drones for surveying and AI for optimizing construction schedules."
In fact, business management firm Deloitte notes AI is expected to drive "a profound transformation" in the construction sector over the next few years.
"This shift will redefine how work is delivered, moving from a labor-intensive, fragmented industry to a digitally enabled and augmented ecosystem," said the firm. "AI-driven tools will optimize designs, automate calculations and manage schedules in real time, enabling smarter and faster project outcomes."
On construction sites automation will become increasingly visible, partially addressing labor shortages, enhancing safety and improving performance, it said.
And as AI integrates into everyday workflows, firms will start to see improvements in cost estimation, risk management and decision-making. This, in turn, will help them to anticipate and resolve issues before they escalate, the firm said in its 2026 engineering and construction outlook.
On job sites, sustainable construction practices — recycled asphalt using low-carbon concrete, smart highway sensors and EV charging infrastructure — are more common.
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"Some road builders are investing in green equipment and methods, aligning with government priorities to reduce emissions," said Loan Analytics. "These innovations not only help meet environmental regulations but can also lower long-term costs and position contractors for new types of projects."
The Birmingham Group reports that federal contracts now require Environmental Product Declarations and lifecycle tracking of key materials.
"The direction is clear," said the recruiting firm. "Sustainability has moved from marketing phrase to baseline requirement."
Firms ignoring the practice risk disqualification from public bids, the company noted.
"Those investing early in green design and compliance teams are positioning themselves for a decade of steady work."
More Happening at Home
The portfolio management firm Loan Analytics is cautiously optimistic about the next five years and expects moderate growth.
"Industry revenue is projected to continue rising over the next five years as government funding remains strong and aging infrastructure demands attention."
But even after the current IIJA funds are spent by 2026, it said, there will still be strong demand for infrastructure construction. In addition to federal funding, several states have passed their own transportation funding measures in the form of increased fuel taxes, tolls or bonds. Loan Analytics believes these initiatives will continue supplementing federal programs.
"Regions with fast population growth — Sun Belt states like Texas, Florida, Georgia — are projected to invest heavily in new highways and urban loop roads."
The projects are on the books through 2030 and will create regional hotspots of construction activity, reported the firm.
"Conversely, states facing budget strains may scale back, so growth will not be uniform nationwide."
Typically, one of the most visible projects in the works are bridge repairs or replacements.
Strategic Partnerships, a government procurement advisor, sees new bridge projects proliferating rapidly. Mary Scott Nabers, the firm's founder, reports that the IIJA earmarked $40 billion over five years to address the backlog of bridge work.
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Where bridge infrastructure is critical, many states and local governmental entities are kicking in with other capital investment options, she noted.
With long lead times, bridge projects require planning, permitting and environmental studies along with the search for private sector contracting partners.
"As the pipeline of replacement projects grows, that private-sector capacity will be central to achieving safety, mobility and value-for-dollars over the next decade."
A planned $311.6 million project in South Carolina will be overseen by a partnership between the state DOT and county officials.
"The objective for the bridge replacement effort is to consolidate two aging structures along US 278," said Nabers.
Two travel lanes with wide shoulders on both sides will create space for emergency vehicles and room for future expansion as traffic volume increases. In the planning and preliminary design phase, the project will undergo environmental reviews and engineering before launching construction, slated for 2028.
Officials in Boston, Mass., are eyeing the century-old Northern Avenue Bridge, said Nabers. The structure, closed to vehicles and pedestrians for more than a decade, will be dismantled to improve safety and reduce environmental hazards.
The city is evaluating two replacement options with different projected costs, but both are projected to cost more than $100 million, noted Nabers.
"The first option would rebuild the bridge as a multimodal crossing that preserves the bridge's historic elements and prioritizes pedestrians and cyclists."
The second would combine a pedestrian bridge with a flood-control system to manage harbor water flow by adjusting floodgates. Demolition is set for 2026.
In Bradenton, Fla., city officials plan to replace a bridge spanning the Manatee River to address long-term mobility, safety and capacity needs.
"The replacement bridge will modernize the existing crossing and provide a more resilient structure capable of accommodating escalating traffic demands," said Nabers.
The project will deliver four 12-ft. travel lanes, with two lanes in each direction. And 10-ft. inside shoulders and 12-ft. outside shoulders are planned. It includes a 12-ft. barrier-separated shared-use path for cyclists and pedestrians, creating a safe and more accessible connection across the river.
Construction is to begin in 2027. To minimize disruptions during the three-year project, work will begin east of the existing bridge for travel space and accessibility.
In Bridgeport, Conn., a $57.6 million city-led project will replace the demolished Congress Street Bridge, said Nabers.
"The project's objective will be to rebuild an essential structure to link the city's downtown area and its East Side," she said. "Local officials confirmed in November of 2025 that the city will receive federal funding support."
The state also is pitching in because the bridge is needed to open up the city, modernize an aging crossing, improve safety and ensure sustainability, she said. Work will include rebuilding the approach roads, updating surrounding utilities and building a modern movable span over the Pequannock River.
In addition, improvements to bicycle and pedestrian access throughout the corridor will be completed. Once it's finished, the bridge will reconnect several neighborhoods that have had no convenient access to the downtown area for more than two decades. Solicitations will be released once pre-construction planning is completed and when the federal funding reaches city officials.
Nabers said actual construction on the new structure could be delayed until early 2027. CEG
